I've been on the Verizon network for years and have really enjoyed the benefits of its coverage and high data speeds. I spent about a year on AT&T and was satisfied with their service but when the opportunity to switch back to Verizon came up I jumped on it. In my opinion I didn't think there was anything better out there, and I was willing to pay the premium to be a part of the Big Red club.
Enter T-Mobile. On July 10th, the bright pink carrier announced that it would become the nation's first "Un-carrier" at an even in New York City. T-Mobile announced that they would be doing away with lengthy, two-year contracts and feature low-cost, month-to-month service plans on their ever-expanding LTE network. In addition to this, the company announced their "JUMP" program, which allows their customers to upgrade to a new device up to two times a year, instead of once every two years. This is a significant change and welcomed news for early adopters such as myself. Sound too good to be true? There are, of course, some caveats to Pink's new plans and services.
New devices are no longer subsidized. Under the regular contract regime of other carries, new phones are heavily subsidized by the carries in exchange for locking you into a two-year contract. Since T-Mobile no longer offers contracts, they no longer offer subsidies. The means customers will need to either buy the phone outright or put some money down on the device and then pay monthly installments until the phone is paid off. Take the new iPhone 5s for example. The 16 GB model at full-retail price is $649. That's a nice chunk of change to shell out all at once, especially for those used to only paying the $199 subsidized price for signing on for another two year contract. With T-Mobile, customers now pay a downpayment of $149 and then pay an additional $20.83 tacked onto their bill for 24 months. There is no interest with paying off the device like this, and the total cost ends up to be the same whether you decide to buy the phone outright or pay it off in installments.
At first glance, this new "Un-carrier" proposition didn't seem like that good of deal. I wasn't impressed when I first heard about it since I don't really care too much about being locked into a contract because I know I'm always going to need a cell phone. And the thought of having to pay off a new phone over several months didn't sit well with me either. I somewhat dismissed T-Mobile as a viable carrier until I actually sat down and did the math.
I have been paying about $165 per month to Verizon, and that amount just recently increased to about $175 since I added my Retina iPad mini to my plan. That's a painful amount to pay every month so I started poking around on T-Mobile's site to see how their plans compared. I was surprised to find out that I could essentially get the same services that I was paying for at Verizon for $100 per month with T-Mobile. That T-Mobile plan would include 2.5 GB of data each for both of me and my wife's line, along with unlimited talk and text. My wife and I are sharing 4 GB between our two lines on Verizon so T-Mobile actually offers more data per device for less money. Along with the $100 T-Mobile plan we would need to get my wife a new phone since her iPhone 5 wouldn't be fully functional on T-Mobile's network. The cost of getting her a new iPhone 5s would add just $20.83 to our plan for an overall plan total of $120.83. Needless to say, this is a significant savings when compared to what I was paying to Big Red.
After crunching these numbers, I quickly came to the conclusion that I should switch carriers. Then I realized I was forgetting one very important part of this whole equation: Early termination fees. Verizon charges some hefty ETFs for breaking a contract before the term has run it's course. Between our two lines we would end up paying $520 in ETFs. When I found that out I thought this switch might not make financial sense until our contract with Verizon was finished. Then I realized I could sell my wife's iPhone 5 on Amazon for around $400 to help lessen the blow of the ETFs. This would effectively take the costs of switching carriers to only about $120. Saving about $50 per month with T-Mobile would easily pay off that deficit in just a few months. There are a few more costs of switching, like the down payment I'd have to pay for the new 5s, but even with all the extra fees associated with leaving Verizon, T-Mobile still won out as the best value and would save me the most money in the long run. Jeff Benjamin over at iDownloadblog breaks down the math in a bit more detail in a recent post that I'd encourage everyone to read if you want to get some more detail on how much the switch might actually cost.
I've now been on T-Mobile for about a week and have been satisfied thus far. I'm lucky enough to live in a big enough city where T-Mobile has a strong LTE presence that I don't notice much different in coverage. And the way I see it, T-Mobile is only going to get better from here. I believe they are making the necessary investments to increase their coverage to be able to go head to head with AT&T and Verizon. T-Mobile's offering is very exciting and I think we'll start to see more and more people making the switch as they learn about all the benefits the carrier has to offer. Only time will tell how this experiment will work out for me, but I'm happy so far and I'm optimistic that my relationship with my new pink friend will last for the foreseeable future.
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